Former BHP Billiton chairman Don Argus© Reuters Photographer / Reuters
Premier Brad Wall and Potash Corp. of Saskatchewan are turning up the heat on Prime Minister Stephen Harper, with a barrage of statements suggesting BHP Billiton Ltd.'s proposed takeover would undermine Canada's strategic position in the global resource industry.
Mr. Wall's adamant rejection of the BHP deal and Potash Corp.'s effort to wrap itself in the Canadian flag are driving up the political cost that Mr. Harper will have to pay should his government allow the foreign acquisition, even if it insists on conditions that address some of the Premier's concerns.
The Prime Minister last week sought to play down the national significance of Potash Corp., calling it an "American-controlled" company. But his 13 Saskatchewan MPs face the daunting prospect of having to defend an unpopular deal in a federal election that could come as early as next spring. And those seats are critical to Mr. Harper's hope of gaining majority status.
Two Saskatchewan ministers - Energy and Resources Minister Bill Boyd and Enterprise Minister Jeremy Harrison - arrived in Ottawa to meet with MPs and officials and drive home Mr. Wall's message that the BHP deal is a bad one for his province.
"We will be speaking with the federal government about our position in the days ahead and we expect them to follow our recommendation," Mr. Wall said Monday.
The ministers were due to meet Industry Minister Tony Clement on Monday night, and Saskatchewan's Conservative MPs on Tuesday. Mr. Clement offered little comment on the issue outside the House of Commons Monday.
Mr. Wall issued a news release Monday that highlighted comments made by former BHP chairman Don Argus about Canada forfeiting its resources sector "much to the detriment of the country." They came after Ottawa approved the foreign takeovers of such mining giants as Inco, Falconbridge and Alcan.
In his remarks, made in 2008 and 2009, the former chairman of the Melbourne-based mining firm warned that too much foreign control could turn Australia into "a branch office - just like Canada."
"We get a glimpse into the thought process of the [former]chairman of the world's largest mining company, and probably a lot of other players in the mining sector in the world, that Canada was easy pickings. That we don't take the same view that other free market countries do of their natural resources," Mr. Wall said in an interview Monday.
"It's not too late to change that. We can send a very powerful signal on this deal."
For its part, Potash Corp. took out advertisements on the weekend, directly challenging the Prime Minister's assertion that the company is American controlled. It noted that it has been headquartered in Saskatoon for 35 years and that the majority of its senior officers and nine of 12 board members are located in Canada.
While Mr. Harper's comment last week was seen as an attempt to play down Potash Corp.'s strategic significance, federal officials insisted that Mr. Harper was merely pointing out the fact that the majority of Potash Corp.'s shareholders are foreign, (although only 39 per cent are American), and that its chief executive and other senior people are based in Chicago.
Mr. Wall and Mr. Harper clearly have different political agendas at play in the $38.6-billion BHP deal.
The Premier is gearing up for an election in a year. While his Saskatchewan Party was once seen as hostile to the province's tradition of Crown corporations, Mr. Wall is now embracing the formerly government-owned potash company and vowing to defend it against both Ottawa and foreign multinationals.
The Prime Minister, in contrast, is both ideologically inclined not to interfere, and aware that a rejection of the BHP deal would have far-reaching repercussions. It would undermine his government's goal of attracting foreign investment and gaining international access for Canadian corporations that are active abroad.
Mr. Harper has his own political calculations to consider. Saskatchewan has elected Conservatives almost exclusively for the past two elections, and most of those Conservative seats appear safe. The governing party typically won Saskatchewan ridings by 20 to 30 percentage points over its nearest rival in the 2008 election - the closest race was a 10-point margin.
But David McGrane, a political scientist at the University of Saskatchewan, said federal Conservatives could be hurt if Mr. Wall stokes the rhetoric in the coming months as he prepares for next fall's provincial election campaign.
Meanwhile, the province's Financial Services Commission has scheduled a hearing for Nov. 8 to consider a challenge BHP has launched, as expected, to Potash Corp.'s poison-pill tactic put in place in mid-August to try to stop the deal.
Also known as a shareholder rights plan, a poison pill is an option extended to existing shareholders that allows them to buy more shares at bargain-basement prices. The aim is to make any takeover prohibitively expensive.
Potash Corp. adopted a shareholder rights plan on Aug. 16 after making BHP's takeover attempt public, to allow it more time to explore and develop alternatives to the bid. Potash Corp. has maintained other bids are coming to trump BHP's offer. So far, no other offers have been put forward.
In a submission filed with the Saskatchewan regulator, BHP said the rights plan should be rejected because there is "no reasonable likelihood" that other bidders will emerge beyond its Nov. 18 offer deadline.